The competition for beauty shoppers is getting ugly. Department stores where high-end cosmetics counters have been for decades are closing. Shoppers increasingly are buying online. Skin care is growing faster than makeup and getting more natural, technical and medicine-based.
Now, prestige beauty giants that dominate the industry are rethinking their businesses. That means selling more at multi-brand retailers, adding stand-alone stores, and acquiring fast-growing upstarts and e-commerce players. It also means catering more to customers’ specific needs by generation and gender where and how shoppers want them.
“The products are ahead of the retail environment and the consumers are ahead of the retail environment, says Alison Chaltas, global president-Path to Purchase, Ipsos. She says that beauty retailers have several areas of opportunity to grow sales if they can figure out how to manage the shopper experience.
In 2017, shoppers returned their attention to skin care and natural products. Some of the credit belongs to celebrities like the Kardashians and their experimentation with extreme facial and skin treatments. While prestige beauty sales in the U.S. grew by 6%, skin care sales grew by 9%, according to NPD Group. Skin products made up 45% of the category growth.
Affluent consumers who are influencers in skin care and cosmetics spent 64% more on women’s cosmetics and 73% more on women’s skin care than overall affluent shoppers, according to the Spring 2018 Ipsos Affluent survey. These “Beauty Affluencers” as Ipsos calls them also spent 52% more on male skin care than overall affluent shoppers. Clinique, Estee Lauder and M.A.C. are the top prestige brands that Beauty Affluencers use.
However, younger women are passing on anti-aging creams and turning to dermatologic treatments through medical offices and medispas to keep their youthful glow. Some 4.3 million of total affluent shoppers say they plan to have some type of cosmetic procedure like injections or surgery in the next 12 months, according to the Ipsos research. Beauty Affluencers are twice as likely to have these procedures done in the same period.
Men are doing more self-care and skin care
It’s not just women, either. In recent years, brands from Kiehl’s to Jack Black and Dollar Shave Club have taken share in men’s grooming as men grew beards, looked for cheaper shaving alternatives and embraced self-care. Unilever bought Dollar Shave Club in 2016 for $1 billion.
Among Beauty Affluencers, 37% are male, according to the Ipsos Affluent survey. Big brands are taking note. In March, L’Oreal launched a luxury men’s grooming line called House 99 with international soccer star David Beckham. At the same time, Barber shops also are seeing a renaissance and they’re selling luxury toiletries, including their own brands. Even Allergan began advertising injectable Botox for men in late 2017.
“We’re seeing a trend in the affluent area but a translation to the prestige mass market is still up for grabs,” says Chaltas. She questions how many men will shop at stores like Sephora when their store designs “scream women.” She says that could mean new stores or brands merchandising products where men already shop like a Dick’s Sporting Goods versus a Sephora.
The promise of a beauty ecosystem
The bigger question is “how can you serve all genders and create a brand that has equity in beauty, efficacy and naturalness that people will pay for all in the same place?” she asks. “E-commerce creates a huge opportunity for gender neutrality and to speak to men differently than women and GenZ versus aging Gen-Xers.”
Indeed, Among Beauty Affluencers, 91% have shopped online, more than at any other store option. And slightly fewer than that said they shopped at Amazon.com (85%). The next highest store option where Beauty Affluencers have shopped in the past 12 months was Target (42%).
“Ecommerce is a new playing field,” says Chaltas. “There’s a big opportunity as people move from department stores to specialty stores to online. We need to stop thinking about it as one or the other and instead as an ecosystem around these customers.”